CA LLC Fees Question - Spidell

CA LLC Fees Question

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Message Board CA LLC Fees Question

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    • #219877
      Anonymous
      Member

      We have a client with a CA single member LLC (a disregarded SMLLC) that receives a 1.5 million guaranteed payment (for services) paid from another CA LLC (upper tier). Assume all of the revenues of the upper tier LLC are already subject to the CA LLC fees. The 568 booklet states: The definition of total income for purposes of calculating the LLC fee excludes all allocations, distributions, or gains from another LLC that was already subject to the LLC
      fee. Can you please confirm whether or not the client’s “guaranteed payment” received from the upper tier CA LLC to his SMLLC should be subject again to the LLC fees? And therefore only subject to the $800. It seems clear that you are not subject to the LLC fees twice. But is there something about the GP income that gets treated differently.

      Thanks!

    • #220025
      Lynn Freer
      Participant

      Under R&TC Sec 17138.2, the rebates aren’t taxable for rebates before 1/1/19 for CA but they have always been taxable for CA. No reduction for cost. However, rebate taxable for both in 2019

    • #220030
      Lynn Freer
      Participant

      Sorry posted answer to the wrong question.The lower tier LLC pays the fee on the income and the upper tier gets the reduction. I’m not sure how guaranteed payments fit in but you could contact the FTB legal staff via their Ask a Legal Expert link on the website

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